THE BREAKFAST BRIEFING

The summer pullback in the stock market seems to have come and gone in a blink of an eye.

Stocks have risen in four out of the past five days as an improving economy and rising corporate profits have recently overshadowed the geopolitical turmoil that has spread across Ukraine, Iraq and the Gaza Strip.

Now, the S&P 500 is testing a key resistance level that, if surpassed, could lead to continued gains in the days and weeks ahead, analysts say.

The S&P 500 rose Thursday to 1956, finishing right at its 50-day moving average. That’s a key technical level that chart watchers use to track the market’s short-term trend. The stock index fell below that level at the end of last month and has treaded below it for the past two weeks.

“A move above that level would suggest that U.S. stocks have jumped right back on an uptrend following what will have been another benign volatility event,” says Jim Strugger, managing director and derivatives strategist at MKM Partners in Connecticut.

The “volatility event” in question was the 4% drop in the S&P 500 over a three-week stretch from mid-July through early August. It has now risen 1.3% in August and is up 5.6% for the year.

The market’s recent rebound has also been reflected among investor sentiment. During the week ended Wednesday, the number of bearish individuals surveyed by the American Association of Individual Investors fell at the sharpest pace in nearly a year.

The longer this bull market has stretched, the shorter and shallower the pullbacks have become. The S&P 500 hasn’t suffered a 10% decline in three years. It’s biggest pullback this year came from mid-January through early February, when the index dropped by about 6%.

Since then, each drop has been greeted with trepidation that the market was gearing up for the long-awaited big decline. And each time, those drops have proven to be benign. The latest tumble and recovery have been no different, with the S&P 500 now less than 2% from last month’s all-time high.

Stock investors aren’t out of the woods just yet. This week’s rebound has had that dog-days-of-summer type of feel to it, with trading volumes each day coming in well below average levels.

But for now, the worst of the stock market’s pullback appears to be over. And if the S&P 500 reclaims its 50-day moving average, it could be poised for further gains in the days ahead.

Morning MoneyBeat Daily Factoid: On this date in 1947, India gained its independence after 200 years under British rule and became part of the Commonwealth of Nations.

STOCKS TO WATCH

J.C. Penney Co. Inc, thedepartment store, reported a narrower-than-expected second quarter loss. Shares rose 6.5% in after-hours trade Thursday.Nordstrom Inc., the upscale retailer, reported sales that fell short of Wall Street expectations. Shares dropped 3.9% in after-hours trade.Monster Beverage Corp., the energy drink maker said Coca-Cola will acquire a 17% stake in the company as part of a new long-term partnership agreement. Shares soared nearly 22% in after-hours trade.

Tesla Motors Inc.entered its fourth consecutive record close Thursday, up 0.4% at $261.38. the company has recently been upgraded to “buy” from “hold” by Deutsche Bank and reported strong second-quarter results.

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